BAT Industries – Tackling the inner city blues

Mike Tuffrey

 

Posted in: Policy & Research

BAT Industries – Tackling the inner city blues

August 01, 1993

Sir Patrick Sheehy’s report for the Home Secretary on the future management of the police force has put the spotlight onto the chairman of BAT Industries, a £19 billion world-wide business employing 200,000 people. Less well reported is Sir Patrick’s strong record of personal commitment to community affairs projects and totally unmentioned is BAT’s distinctive and extensive community involvement programme – including group subsidiary Allied Dunbar, a company with a formidable reputation in its own right.

The police, the proverbial boys in blue, may not like his recommendations, interpreted in the media as a belated dose of Thatcherism, but several of the inner city areas they patrol have good reason to be grateful for his and BAT’s commitment over recent years.

Group policy

BAT’s community affairs rationale is conventional – that no successful company can exist in isolation from the community in which it does business; what makes BAT distinctive is the way the policy is applied. The policy itself is very much focused on helping young people realise their full potential through high quality education and on encouraging enterprise through support for small business, defined as:

to identify opportunities to promote inner city regeneration through support for education and enterprise;

to play an active part in making education more relevant and effective; and

to ensure the relevance of the Group’s community policy through regular review and analysis of the urban environment.

In implementing it, BAT seeks:

to cooperate with central and local government, voluntary groups and other companies to achieve maximum impact, and

to allocate management resources to community projects, both directly and through secondment

to encourage employees to participate in their communities and to contribute to charities through by matching their giving.

The emphasis through 1980s was on enterprise and BAT is still a strong supporter of the movement. But now it has come to recognise that laying the foundations through good schooling is as important as offering help later. So the emphasis in 1990s is broadening out to include education and to build the links between the two.

Projects

BAT’s approach is distinctive in that it concentrates support on a limited number of major projects, focused on a few major locations, not linked to specific towns where there is an operational presence, and gets involved in the day-to-day running. So support is not just cash but also in expert staff time – the major projects can call on financial expertise of accountants, for example, or legal assistance from the corporate lawyers.

The specific locations and major projects are:

Southampton Enterprise Agency in 1981;

Brunswick Small Business Centre, Liverpool, in 1982;

Brixton Small Business Centre in 1984;

South London Business Initiative, in 1986;

Teeside City Technology College in 1989, and

Lambeth City Challenge in 1992.

As an indication of the scale of support offered, BAT provided £1.1 of the £1.4 million needed to set up the Brunswick Small Business Centre. It contributed £2.2 million to establish the Brixton Small Business Centre in partnership with Lambeth Council.

The major business centre projects are managed at arms-length through BAT Small Business Ltd. This is a wholly-owned subsidiary run on commercial lines with the disciplines of a business plan, monthly accounts, etc. The company aims to operate without subsidy on day-to-day basis, for example, earning income from renting out work units, but BAT does provide support when required.

Wider group

Group companies in the UK, principally Allied Dunbar, Eagle Star and British American Tobacco, are encouraged to follow the policy set out above, but the initiative is left up to them. One consequence is a noticeable disparity between Allied Dunbar and the others. Allied Dunbar merits a profile in its own right and so this article concentrates on group-level activities only.

Management

The community affairs function, responsible for the education and enterprise programme, is part of group public affairs and run by Brian Hutchinson, the full time community affairs manager. His background is not from within BAT, having joined in 1984 specifically to launch and then run the Brixton Business Centre. That having succeeded, he was seconded to the Government’s Inner Cities Unit, working with Kenneth Clarke first at Employment and then at the DTI. In 1988 he returned to take overall responsibility for BAT’s community affairs programme, while retaining his wider involvement as a member of the National Curriculum Council. As a result, BAT has particularly strong links with the various government agencies tackling inner city enterprise and education issues.

Donations

Even given the tight policy focus, BAT continues to receive many general applications for funding, across the whole range of social issues, such as disability, ageing and the arts. £200,000 is allocated centrally to new projects each year, with some on-going commitments, so the annual donations total is more. This is administered through a charities committee, chaired by the group finance director and administered by the company secretary’s department. Subsidiary companies, such as Eagle Star, make their own donations directly.

Staff

BAT continues to see full-time secondment as a valuable tool for career development and community support. For example, a young Eagle Star manager worked with the Lambeth team in preparing the City Challenge bid. An active programme with the Public Appointments Office also offers pre-retirees the option of placements at the end of their careers. However, outside Allied Dunbar, wider employee involvement through volunteering and flexible assignments is not actively organised, although many individuals do help community projects on their own initiative.

Overseas

Although UK based, the vast majority of staff are employed abroad and the UK only accounts for a quarter of sales and a tenth of profits. Each overseas subsidiary undertakes activities appropriate to its own communities, such as health programmes in South America and arts sponsorship in Canada.

As BAT expands into Eastern Europe, acquiring former state-owned tobacco operations, plans are being made to establish an active community affairs programme along side, concentrating on enterprise. This is seen not just as good for business long term but helps to demonstrate commitment and win acceptance.

Communications

A group community affairs brochure is produced regularly and articles about activities go in staff newsletters and other internal publications, a fairly typical low-key approach. Clearly, for a company earning more than two-thirds of its profits from tobacco, there are sensitive public affairs issues to be handled. Despite being part of the public affairs head office function, community affairs is not used as a palliative – the activities are ones which any major company should undertake, whatever its business. The choice of enterprise and education helps achieve this separation – a community programme on health issues would be altogether more awkward.

The future

Internally, BAT needs to spread more widely across the group the commitment to offer expert skills through staff, as well as financial muscle. Likewise, it needs to encourage the subsidiaries to develop their own programmes on a par with Allied Dunbar. However these internal tasks are comparatively simple compared to the major challenge it faces externally.

BAT can be justifiably proud of the role it played during the 1980s in establishing the enterprise movement. Looking at a long view of corporate community involvement in the UK, that is undoubtedly a success story. If by the end of this decade, the problems currently besetting education have been overcome, and BAT has again played a leading part, it can be even prouder.

But no one should underestimate the scale of the problems: even if the positive lessons from Teeside City Technology College and from any other major new initiative BAT may support can be identified, the task of getting them adopted across the whole education system is enormous. It will need the total commitment of the other partners in education, especially the government. BAT’s close links with central and local government should prove invaluable in achieving that – although given Sir Patrick’s recent “brush with the law”, it might be understandable if he is cautious about venturing into the public domain for a while!

Factfile

B.A.T. Industries p.l.c.

Year ended 31 December 1992

Chairman: Sir Patrick Sheehy

Main business:manufacture and sale of tobacco products worldwide and provision of personal financial and insurance services in the UK and North America through principal subsidiaries Eagle Star, Allied Dunbar and Farmers

Turnover: £18.7 billion

Profit before tax: £1.6 billion

Employees: 198,000 (15,000 in the UK)

FT UK Top 500 ranking: 4 (1.1.93)

Charitable donations: £6.6 million (£2.9 million UK only)

Total community contribution: not available

% of profit before tax: 0.4% (1.7% UK equivalent)

Memberships: BITC, Per Cent Club, ABSA

Community Affairs Manager: Brian Hutchinson

Address: Windsor House, 50 Victoria Street, London SW1H 0NL

Phone: 071 222 797 (fax: 071 222 2751)

Corporate Citizenship Briefing, issue no: 11 – August, 1993

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